Sage triples divi in Footsie fight

SOFTWARE group Sage today made an 11th-hour bid to retain its FTSE 100 status by more than trebling its dividend despite an increase in earnings of only 6%.

But the strategy could be to no avail, with Sage shares sliding 11p to 152p as analysts downgraded their recommendations and investors took profits made during the stock's recent rally.

Sage was today ranked about 85th in the Footsie with a value of £1.9bn, making it unlikely the company will be eliminated when the index is recalculated next week.

But as the only technology company left in the Footsie, Sage saw its capitalisation fall to as low as £1.3bn in October and could yet be relegated. Brambles and Corus currently seem set for the cut, to be replaced by property developer Liberty International and British Airways.

The dividend rise, which ends the company's long practice of lifting annual payouts by only 10%, acknowledges the return to fashion of dividends as investors search for yields in a low interest rate environment.

Sage will pay a 1.5p dividend for the year to 30 September, representing a yield of 1% based on today's share price, still well below the Footsie average. Pre-tax profit was 6% higher at £129m, though this included a one-off cost of £6m from its sponsorship of the Sage Gateshead music centre.

The overall result was in line with forecasts made by chairman Michael Jackson last month. Sage also maintained its refusal to adopt conventional accounting practices and therefore would not write down the £830m of goodwill on the balance sheet, saying current values were fair.

Merrill Lynch analyst Lucy McFetrich downgraded her recommendation from 'buy' to 'neutral', saying the stock was trading at nearly 20 times forecast earnings for 2003.